This Morning: FB’s Four Downgrades, QCOM, SWKS Surge

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of Facebook (FB) are down $1.03, or 3.3%,a5 $30.21, after the company last night beat Q4 revenue and earnings expectations but turned up lower mobile results and higher investment costs, than some analysts expected. The stock this morning got four downgrades, from Jefferies & Co., Stifel Nicolaus, BMO Capital, and Citigroup.

Citi’s Neil Doshi, cutting his rating to Neutral from Buy, while maintaining his $30 price target, writing “We view FB as a core long-term ‘Net stock. But with plans to invest heavily in the biz in 2013, and little expected contribution from new initiatives like Gifts or Graph Search, we don’t see any near-term catalysts for the stock.”

“We believe that FB can justify a 35x EPS multiple (given its high 30% EBITDA and EPS 3-year CAGR); but, with 2013 numbers coming down, we can’t justify a higher multiple than that. Hence, the Neutral.”

Shares of Fusion-IO (FIO) are down $3.10, or 15.4%, at $16.99 after the company last night slashed its year revenue outlook, citing delays in ordering new gear from two customers who make up half its revenue, Apple (AAPL) and Facebook. The stock this morning got three downgrades, that I can see, from Credit Suisse, JP Morgan, and Piper Jaffray, though Lazard Capital also raised the stock to Buy from Neutral.

In his upgrade note this morning, Lazard Capital’s Edward Parker, raising FIO shares to Buy from Neutral, with a $23 price target, writes that “Customer concentration and its associated lumpiness is a fundamental aspect of the business, but with the reset we believe numbers now adequately compensate for this.”

Shares of Qualcomm (QCOM) and Skyworks Solutions (SWKS), both big Apple (suppliers that reported last night, are both rising this morning after better-than-expected results, with SWKS up $2.95, or 13.4%, at $24.51, and Qualcomm up $3.15, or almost 5%, at $66.68. Price targets and estimates appear to be going up for both, though there are no ratings changes as of yet.

In her assessment of Skyworks this morning, JoAnne Feeney of Longbow Research particularly likes the fact the company has diversified its business away from Apple, writing “Samsung [Electronics (005930KS)] exposure of 17% and new product ramps there are helping to offset the Apple decline (25% of sales); the company is holding onto share in PA and new functions look to be offsetting ASP and integration pressures.”

“QCOM’s results last night also confirm the ramp of non-Apple models and we see strong smartphone growth in line with our initial views.”

The stock gets another downgrade this morning, following the one from Evercore last night, this one from Credit Suisse’s Kulbinder Garcha, who cuts the stock to Underperform from Neutral, writing that “we see limited scope for traction in the hypercompetitive smartphone market,” and that “RIM’s major business model change in services will result a significant decline this high margin revenue stream, driving operating losses and potential cash burn.”

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There are 10 comments

JANUARY 31, 2013 11:44 A.M.

Anonymous wrote:

Do Blackberry devices still perform push email for free like they used to? One pin number per user? And all that. Or what has changed?

JANUARY 31, 2013 11:45 A.M.

freddysrevng wrote:

Didn't QCOM sell a lot of Snapdragon processors to BBRY for the BB 10 launch?..... Hmmm.... could be a very interesting "tell".....

ENTER BB 10 ....

JANUARY 31, 2013 11:51 A.M.

@ freddysrevng wrote:

I think at this point your significance is approaching the big zero. That means anything you write will go unread. You no longer inhabit that territory once inhabited by loud mouth vampires. The steak has been driven into your head. This stock will flame out. It too like you has the breath of an open grave. Cheers.

JANUARY 31, 2013 11:57 A.M.

DK wrote:

The final nail in the coffin!!! Boy BB is so innovative!!!! Touchscreen smartphone attached to a Apps/music/video Eco-system. Wow! I guess BB using the same play book as Samsung, MS, Amazon, Moto, Google...that is copy Apple's lead.

Don't worry everyone. Apple is working on some amazing products. You soon will have some new items to copy.

JANUARY 31, 2013 12:04 P.M.

freddysrevng wrote:

BBRY could have announced that Steve Jobs was the "New CEO" and they would have brought the stock down. Sick but true.. Phones look great... Launching in other parts of the world where BlackBerry is more popular than U.S. was planned... Great launch yesterday - Buzz everywhere... SuperBowl Ad... welcome to the team Ms. Keys....

Yes. Golly good. But we here in the United Kingdom still haven't sold one Blackberry BB10. Not one. Blackberry staff are here from Kanuckastan and poised near the door on their knees ready to kiss every person's buttocks and sphincter that enters the door. See. Mwah Mwah Mwah! And still no sale. Pip. Pip.

JANUARY 31, 2013 12:08 P.M.

Ed wrote:

Say good night to Rimm. This stock
is a joke.

JANUARY 31, 2013 12:43 P.M.

Oh Oh Blackberry Super Bowl Comercial... wrote:

Everyone everyone! One two three. BOOOOOO!

Oh look. The BB10. BOOOOOOO

LOL.

JANUARY 31, 2013 1:16 P.M.

freddysrevng wrote:

If any of you wonder why Z10 is not launched in the U.S. first - take a look at this article and all of the other "hand picked BBRY bash pieces" all over the blogesphere.

These "sentiments" are, exactly, why it made sense to reward countries who are far more loyal to BlackBerry with the launch.

Great launch, yesterday, great phones BBRY is "New and Improved".

I will go with Simona Jankowski, who reaffirmed her "Buy" and $19 price on BBRY over all of these "iTard Fools" who are so prevalent in the country and over quoted.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.